Canada’s main stock index rose narrowly on Tuesday, as bleak earnings reports from e-commerce company Shopify Inc. and cannabis producer Hexo Corp. weighed.
The Toronto Stock Exchange’s S&P/TSX Composite index was unofficially up 30.61 points, or 0.19 per cent, at 16,418.14.
Seven of the index’s 11 major sectors closed lower, with a 1.3-per-cent drop in the health care sector leading the declines.
Hexo Corp. fell 3 per cent after it posted a bigger net loss, hit by an inventory writedown.
The tech sector was down 1.1 per cent, led by a 3.2-per-cent fall in shares of Shopify Inc. after it posted a quarterly net loss because of higher investments.
The energy sector rose 0.6, as oil prices were pressured by expectations of a rise in U.S. crude inventories and doubts that OPEC and its allies will cut oil output further in December.
The materials sector, which includes precious and base metals miners and fertilizer companies, reversed early losses and jumped 1.1 per cent despite gold falling to a one-week low.
The Canadian dollar weakened against the greenback on Tuesday, retreating from an earlier three-month high as positive investor sentiment was tempered ahead of interest rate decisions by the Bank of Canada and the Federal Reserve.
The S&P 500 eased back from a record high after a U.S. administration official told Reuters that Washington and Beijing were continuing to work on an interim trade agreement but that it may not be completed in time for the leaders of the two countries to sign in Chile next month.
“We have seen a little bit of client sentiment that maybe risk assets have gone too far, you’re going to see a little bit of a retracement,” said Scott Lampard, head of global markets at HSBC Bank Canada. “It feels like it is more trading activity as opposed to anything more structural right now.”
The loonie has rallied about 2 per cent since early October, buoyed by robust domestic jobs data and investor optimism that a U.S.-China trade deal could boost Canada’s commodity-linked economy.
“Those that have had a bullish Canadian dollar view and position have gotten some satisfaction the last number of weeks as the data in Canada has held up well,” Lampard said.
The Bank of Canada is likely to keep interest rates steady at 1.75 per cent on Wednesday in its first policy announcement since last week’s federal election, despite signs that investors seeking higher-yielding currencies are shifting more money into Canadian dollars.
The Fed is also due to make an interest rate announcement on Wednesday. It is expected to lower the range for its policy rate to below the Bank of Canada’s equivalent rate for the first time since December 2016.
The Canadian dollar was trading 0.3 per cent lower at 1.3094 to the greenback, or 76.37 U.S. cents. The currency’s weakest level of the session was 1.3096, while it touched its strongest level since July 22 at 1.3043.
The S&P 500 edged lower to snap a four-session win streak on Tuesday and it retreated from a record high as investors grappled with a flood of earnings and the latest update on a potential trade deal between the U.S. and China.
Hopes of a U.S.-China trade deal and expectations of another interest rate cut by the Federal Reserve when it concludes its two-day meeting on Wednesday have pushed stocks higher the past several sessions, sending the S&P to its second straight record intraday high.
But indexes pulled back after a U.S. administration official told Reuters that Washington and Beijing are continuing to work on an interim trade agreement, but it may not be completed in time for the leaders of the two countries to sign in Chile next month.
“It is actually impressive that we have held these gains, even if we are down slightly, it is a pretty impressive day considering what is going on, that there hasn’t been this hard sell-off pressure,” said JJ Kinahan, chief market strategist at TD Ameritrade in Chicago.
“The encouraging thing is we are trading more on what you should be trading on, that being earnings, and less on rumor and innuendo, which is a nice change of pace and how the market should work.”
Tech shares, which have been closely tied to trade progress, lost ground after the report and were last down 0.92 per cent.
Drugmakers Merck & Co Inc and Pfizer Inc both gained after reporting upbeat third-quarter results to help keep the Dow and S&P near the flat line. The healthcare sector , which has been the second-worst performer among the 11 major S&P 500 sectors this year, rose 1.16 per cent as the best performer on the session as Merck gained 3.5 per cent and Pfizer advanced 2.5 per cent.
But shares of Google parent Alphabet Inc, however, lost 2.20 per cent and weighed on the Nasdaq as its quarterly profit missed estimates due to higher costs.
Third-quarter earnings of S&P 500 companies have largely been better than expected, with over 77 per cent of the 236 firms to report so far surpassing profit expectations, according to Refinitiv data. Still, earnings are expected to decline by 1.9 per cent for the quarter.
Other big names reporting this week include tech and internet heavyweights Apple Inc and Facebook Inc , as well as oil majors Exxon Mobil Corp and Chevron Corp.
The focus now shifts to the Fed meeting, where the central bank is widely expected to deliver a quarter-percentage-point interest rate cut for the third time this year.
The Dow Jones Industrial Average fell 20.04 points, or 0.07 per cent, to 27,070.68, the S&P 500 lost 2.54 points, or 0.08 per cent, to 3,036.88 and the Nasdaq Composite dropped 49.14 points, or 0.59 per cent, to 8,276.85.
The S&P earlier in the session reached a high of 3,047.87, its second straight intraday record.
General Motors Co gained 4.28 per cent after its quarterly net profit topped estimates, but the carmaker slashed its earnings forecast for 2019 as the 40-day U.S. labor strike by the United Auto Workers union brought virtually all of its North American operations to a standstill.
Beyond Meat Inc tumbled 22.22 per cent as the vegan burger maker said it would need to offer more store discounts amid rising competition.
Shares of GrubHub Inc plunged 43.30 per cent after the online food delivery company warned of slowing growth as customers opted to choose from a growing pool of rival providers.
Oil prices were mixed on Tuesday, paring earlier steep losses as investors focused on signs that U.S.-China trade tensions could ease next month and expectations that U.S. refined product stockpiles declined last week.
Brent crude settled at $61.59 a barrel, up 2 cents, after falling as low as $60.66. U.S. West Texas Intermediate crude ended 27 cents lower at $55.54 a barrel, after earlier hitting a session low of $54.61.
U.S. refined product inventories were seen declining last week as refinery runs remained relatively low. Gasoline stocks likely fell 2.2 million barrels, which would their fifth weekly drawdown, while distillates which include diesel and heating oil, were seen falling for a sixth week in a row, forecast to have dropped by 2.4 million barrels, according to a Reuters poll.
“The market is getting increasingly concerned about refined product inventories, and that’s supporting crude oil,” said John Kilduff, a partner at Again Capital LLC in New York. “U.S. refiners are operating at super-low capacity. They’ve had a rough year; there was no real rush to come back into service.”